Accountable Health Care Incentives: The "Spoonful of Sugar" Approach Must Ensure "the Medicine Goes Down"

There could be a problem with current incentives and funding for support structures for accountable care organizations (ACO). This "spoonful of sugar" approach is gladly accepted by providers, but getting them to take "down the medicine" of meeting improvements in quality and reductions in cost of care hasn't been demonstrated. This was one of URAC President and CEO Kylanne Green's key points at the recent Health Value Summit in Salt Lake City, hosted by the prestigious Leavitt Partners health policy think tank.

In front of an audience of health care policy influencers, Green - the head America's leading health care quality accreditation organization - pointed out that payments are too often treated as an enhancement to providers' income rather than a down payment on transforming their health care practices to a value-based model. Successful transformation to pay for value requires a relationship among providers and between providers and payers that is not prevalent today. Who is validating quality of the outcomes for which providers are being paid? This lack of progress derails the promise of the Triple Aim to optimize the performance of health systems. Watch the video here.

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Green said: The problem with the funding aspect is that when you use the spoonful of sugar approach, you better make sure that the medicine gets swallowed. When providers who have been under economic siege, as they believe they have, are provided with funding to develop support structures, it's going into income. Unless there are safeguards that say that objectives will be met, and we have some way of validating what's happening, the current funding approach will not be successful.

Green also warned that incentives frequently reward process when they should be tied to outcomes. People due unnatural things where money is involved, and that which is unnatural is not sustainable. Incentives that reward process are a distraction. When providers focus on process, or the "how," rather than results, there is no guarantee they will produce better health care quality with lower costs. Allowing the practitioner to exercise judgement on how to achieve a result is much more likely to produce a better result. If health care providers understand the desired result, and if they're incented toward that result they will drive to it with their own means.

The proper use of support funding and incentives are two of the five "element of success" she's observed among successful providers during her over four decades in health care in positions as diverse as a registered nurse to health plan management, to hospital management, to accreditor. Among Green's elements of success:

1. Timing - Accountable care organizations, like other businesses, have the same principle driver of success: right time, right place. Time and place are interdependent in health care. It is true that all health care is local. Understanding and responding to what is happening, when it is happening and where it is happening is critical to success. The first to understand time and place in health care were the true pathfinders of health care value more than 6 decades ago.
2. Culture - A creation of and adherence to "common goals, common purpose, [and] social connectivity" that anchor a patient-centered dynamic.
3. Business model - New expectations demand that providers acquire new skills and talent, find innovative ways to improve practices, collect and use data, and manage contractual relationships.
4. Incentives - As mentioned, long-term results should take priority over short-term gains. Be specific, start small and provide equity.
5. Support Funding - New payer/provider relationships must spur providers to work with and through others to meet new value-based demands.

Drawing from her experience as a leader of change in the new world of health care, Green chronicled the recent collaboration between insurer Aetna and the Northern Virginia provider Inova Health System as a way to address demands for accountability. This 50/50 health plan partnership, Innovation Health, was unveiled in 2012. Before leading URAC, Green served as executive vice president at Inova Health System and CEO of its Care Management and Health Plan Operations. Calling Inova a "late to the party" player in past opportunities to adapt to marketplace trends, Green noted the Affordable Care Act left the "resource rich" Inova at a time and place - one element of success - and the task of choosing whether they were "going to go big or... go home." "We went big," Green explained. "We spent a year and a half in a strategic planning process and ended up understanding specifically that we had competencies and talents that put us ahead of others in health care, but we had no business trying to develop other competencies ourselves. But it was already out there. So we decided we were going to have a relationship with a payer."

Noting that Inova wanted its own health plan, Green pointed out how this was all uncharted territory: Now how do you get a payer to allow you [to] facilitate establishing a new health plan? We went through a process. We had a lot of interest, kissed a lot of frogs, and we ended up getting together with Aetna to develop a 50-50 jointly owned health plan. It took a lot of effort, and there's where culture comes in.

The success, Green said, came from a "common goal, common purpose, and a trust [with Aetna] that - when you were asked to do something you really weren't sure you wanted to do - you took it as an article of faith that the person on the other side of the table would help make it work for you." The partnership - capitalizing on the successes of both partners led to a new health plan in Northern Virginia that experienced phenomenal growth in its first two years as the community learned the value that could be created when payers and providers worked together in new ways. Inova went from being late to the party to being an organization Green now considers on par with other health care pathfinders. That's what the leaders of the healthcare industry want - and need - to hear.